Jaykul at huddledmasses has an interesting post on Is PowerShell $ShellId too big a burden? which explains why sqlps.exe, the PowerShell host provided by Microsoft in SQL Server 2008, is a closed shell and lacks support for Add-PSSnapin. To see the shellid run $shellid from the PowerShell host. In regular PowerShell the value is Microsoft.PowerShell and in sqlps.exe the value is Microsoft.SqlServer.Management.PowerShell.sqlps. Shellid is readonly and when you create a mini-shell/closed shell like sqlps.exe you implement the shellid as part of the RunspaceConfiguration. When you implement your own host/shell you create your own RunspaceConfiguration inheriting from the base abstract class. The base class does not have a AddPsSnapIn method and cannot be overriden. Finally no AddPsSnapIn method means you’ve just created a closed shell! Read the comments section which includes my observation about sqlps.exe to get the full story.
As a result of his post I came away with another useful tip to use both a Microsoft.PowerShell_Profile.ps1 file and a Profile.ps1 file. By doing this you can avoid running incompatible commands such as Add-PSSnapin which is not supported in sqlps.exe. Put the host specific commands for example Add-PSSnapin only in the Microsoft.PowerShell_Profile file and then put the commands which can run in any host in Profile.ps1. You also eliminate the error message: "The term ‘Add-PSSnapin’ is not recognized as a cmdlet, function, operable program, or script file. Verify the term and try again." you receive launching sqlps when you have both PowerShell Community Extensions and sqlps.exe installed on the same machine. See my post in the issue tracking area of PowerShell Community Extensions for more details on this error.